OPEC said it is open to considering the extension of the oil production cut deal beyond the first quarter of 2018, despite improvement in conformity and drawdowns.
Oil market rebalancing is moving in the right direction and towards bringing global stock inventories down to a five-year average after oil stocks fell in July, OPEC said during a meeting of the joint OPEC-non-OPEC Ministerial Monitoring Committee (JMMC).
The latest five-year average has been reduced from the beginning of the year, supported by the narrowing Contango (when spot or cash price of a commodity is lower than the forward price), while floating storage has also been on a declining trend since June, OPEC said.
OPEC members and a few non-OPEC countries, led by Russia agreed to begin cutting oil production by 1.8 million barrels per day from Jan.1 until March-end 2018.
"All options, including the possible extension... beyond Q1 (20)18, are left open to ensure that all efforts are made to rebalance the market for the benefit of all," OPEC said in a statement.
July conformity from the countries part of the agreement was at 94 percent, OPEC said in a statement.
The committee expressed confidence about the oil market moving in the right direction with particularly with “global oil demand growth in 2017 is now better than expected, while for 2018, world oil demand is anticipated to rise further.”
JMMC will hold another meeting in Vienna on September 22 and has invited Libya and Nigeria to it, who so far have been exempt from the output cuts due to protracted impact from conflict.